April’s Automotive Fever

This April began with a ‘fast and furious’ spree of automotive investment, probably thanks to the historic $15 billion acquisition deal of ADAS manufacturer Mobileye by Intel. The open window for future IPOs on Wall Street after Snap went public also added some fuel to the investors’ extravagance. And with Uber, still the most highly valued private tech company, showing vulnerability, there’s a place for much more. Finally, car manufacturers have fully realized the need to become a tech company, and with the understanding that they must build a smart device on top of their wheels and engine, their hunger for tech is right now insatiable.

Recent Deals in the Automotive Sector

Lyft

Lyft managed to take advantage of Uber’s recent scandals to add users, drivers, and $600 million. A few days ago the ride-hailing company announced it had closed a $600 million round of funding at a $7.5 billion valuation. This brings the company closer to $3 billion in total funds since its establishment five years ago. [Read here for Zirra’s Premium Insights report on Lyft]

Lyft says it enjoys a surge of about 60% in passengers week over week since the start of Uber’s scandals back in January. First, Uber broke a taxi driver’s strike and then suffered a high-profile ban as a consequence. Since then, the company’s reputation has continued to deteriorate. In February, a former engineer at Uber wrote about enduring sexual harassment and discrimination there. Later, a video surfaced showing CEO Travis Kalanick berating an Uber driver who complained that Uber’s price cuts had driven him into bankruptcy. And recently, Google’s self-driving car unit sued Uber, alleging it had stolen its ideas.

But Lyft didn’t just raise money because Uber is in trouble. Lyft had to raise funds in order to support itself after the loss of Didi Chuxing as its partner in China. Also, Uber’s deep pockets force Lyft to keep subsidizing rides and support expansion into more cities in the U.S. Unlike globally-wretched Uber, Lyft has no other territory to go to, so it has to give all that it has got on American soil. [Read here for Zirra’s full Premium Insights report on Lyft]

Valens

Valens announced a $60 million round a few weeks ago, led by investors such as IGP, Delphi, Samsung Catalyst and Goldman Sachs, after it proved it is on the right track as an automotive chip maker. Valens has recently launched a hardware device for smart cars, partnered with Daimler (Mercedes) and formed a new alliance that standardizes content streaming in cars (HDBaseT). [Read Zirra’s deep analysis report summary of Valens or the shorter Premium Insight report]

Valens has developed a chip that allows a single relatively simple cable to transmit high-speed video and audio, USB and data from multiple streams within a car. With this technology, car manufacturers will be able to allow drivers to listen to music, stream video or use apps directly from their phone to the infotainment system at the highest quality a car can offer. At the same time, the channel can be used for self-driving protocols and telematics systems. As of today, no other company offers these capabilities altogether.

However, according to Zirra, Valens faces quite a few challenges: The semiconductor market has been undergoing consolidation lately, with Avago acquiring Broadcom and Qualcomm acquiring NXP. This creates a field with more dominant competitors for Valens to take on, but could also portend a lucrative eventual sale of Valens to an industry-leading semiconductor company; But Valens’ biggest challenge is to succeed in marketing and creating partnerships to gain traction in the automotive industry and edge out their much bigger competitors who offer inferior solutions. [Read Zirra’s deep analysis report summary of Valens or the shorter Premium Insight report]

Otonomo

Otonomo, a startup that tries to give the power of smart transportation back to the car manufacturers, also raised $25 million this month in a strategic round led by Delphi, only five months after it had raised $12 million from VCs such Bessemer and StageOne.

Otonomo is a cloud platform that aggregates data provided by car manufacturers and connects it to third party services such as insurance companies and software developers. In that way, car manufacturers can have ownership over data produced by their vehicles, data they have lost to OBD dongles and applications that are connected to them. [Read here for Zirra’s Premium Insights report on Otonomo].